Charben Haulage v Beilby

Charben Haulage v Beilby - [2010] NSWSC 510 - NSWSC 2009 case summary — Zoe

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The Federal Court proceedings on appeal 17 The Full Federal Court held: (a) "… the primary judge misconstrued clause 44": [80]. (b) "… unless the challenge contemplated by clause 44.5 was triggered, the Environmental Report was to be determinative of whether Caltex had performed its obligation under cl 44.2": [77]. (c) The word ' indicates ' in clauses 44.2(b) and 44.5 must be construed in the light of the scheme of cl 44 just outlined. It does not mean simply that the environmental report states in terms that the Works had been completed. It would not be sufficient to satisfy the condition in clause 44.2(c) for Caltex to provide a report that did no more than state that the Works had been completed. It required something more than that. Clause 44.5 would be otiose if the word ' indicates ' simply meant ' states '. It must mean that the environmental report demonstrates on its face, in professional detail, in accordance with appropriate guidelines, that the levels of pollution have been reduced to the relevant level": [73]. (d) "…The parties evinced a clear and unequivocal intention that, once completion had occurred, [the plaintiff] was to have no claim against Caltex in any way connected with the Works, the Environmental Report or any environmental contamination of Lot U": [78]. (e) "However, so long as any report that was provided as the Environmental Report satisfied the requirements of Clause 44.2(b), [the plaintiff] did not have any option but to complete the purchase of Lot U, unless it exercised its rights under Clause 44.5 to notify Caltex that it was not satisfied that the Environmental Report indicated that the Works had been completed. If Report 19844C satisfied the requirements of Clause 44.2(b), [the plaintiff] simply had no option but to complete the Caltex Contract": [181]. (f) "The evidence before the primary judge does not support a finding that [the plaintiff] was induced by the Report 19844C Representations to enter into or complete…the Caltex Contract. Accordingly, the cause of action under s 82 of the Trade Practices Act consequent upon alleged contravention of s 52 of the Trade Practices Act must fail": [186]. (g) "As indicated above, it was not suggested on the hearing of the appeal that Report 19844C did not indicate that the Works, as defined, had been completed. Indeed, the proceeding appears to have been conducted on the basis that Report 19844C satisfied clause 44.2(b) of the Caltex Contract, in that it was an environmental report from Caltex's environmental consultant ' which indicates that the Works have been completed '. That is to say, the parties appear to have accepted that Report 19844C indicates that Works consisting of the reduction of the levels of petroleum hydrocarbon pollution of Lot U, caused by its use as a service station, to a level that would permit the use of Lot U in accordance with the purposes and uses permitted by the present zoning of Lot U, had been completed. It is tolerably clear from the evidence summarised above that Mr Beilby understood that Report 19844C indicated, in the relevant sense, that the Works had been completed and, in reliance upon and induced by that indication, advised Charben to complete the purchase of Lot U": [260] (h) "The case was conducted on the basis that Report 19844C satisfied clause 44.2(b) of the Caltex Contract. That is to say, it was an environmental report from Caltex's environmental consultant ' which indicates that the Works have been completed '. It was not suggested on the hearing of the appeal that Report 19844C did not indicate that the Works had been completed. It must follow that Report 19844C indicates that works consisting of the reduction of the levels of petroleum hydrocarbon pollution of Lot U, caused by its use as a service station, to a level that would permit the use of Lot U for [the plaintiff's] proposed use, in accordance with the ' BUSINESS 3(a) - (A2) RETAIL SERVICES ' zoning of Lot U, had been completed": [190] 18 As regards EES, the Full Court held: "The evidence before the primary judge does not support a finding that [the plaintiff] was induced by the Report 19844C Representations to enter into or complete…the Caltex Contract. Accordingly, the cause of action under s 82 of the Trade Practices Act consequent upon alleged contravention of s 52 of the Trade Practices Act must fail": [186]. 19 The Full Federal Court stated: (a) "It is by no means clear that, in such circumstances, EES was not under a duty to take care in providing Report 19844C, even if EES had no knowledge of the terms of the Caltex Contract": [266]

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Principles 27 A cause of action in negligence does not accrue until actual non-negligible loss is suffered by the plaintiff as a result of the breach. It is then that time begins to run - Wilson v Rigg [2002] NSWCA 246 [23]. 28 Actual loss occurs, relevantly, where, when the first binding step is taken, whatever extrinsic circumstances may transpire, a loss must be suffered, even if it remains undiscovered - Wardley Australia Limited v State of Western Australia (1992) 174 CLR 514 per Brennan J at 537 and see, by way of example, Winnote Pty Limited v Page (2006) 68 NSWLR 531 (lease legally ineffective to give any right in respect of peat mining), Scarcella v Lettice [2000] NSWCA 389; (2000) 51 NSWLR 302 (defect in title) and HTW Valuers (Central Qld) Pty Limited v Astonland Pty Limited (2004) 217 CLR 640 (actual loss resulting from purchase at overvalue). 29 Actual loss is to be distinguished from contingent loss in respect of which the cause of action does not accrue until the contingency has been fulfilled - Wardley at 527. Contingent loss is incurred where an adverse risk which may never eventuate comes to pass. When it does, but only then, is loss suffered - Murphy v Overton Investments Pty Limited (2004) 216 CLR 388 at [55]. 30 As Hodgson JA observed in Segal v Fleming [2002] NSWCA 262: "…where a person incurs a chance, even a substantial chance, of suffering a loss, in due course it may become clear that no loss is ultimately suffered; and so long as there is some appreciable chance that no loss will be suffered, it is unreasonable to require a plaintiff to commence proceedings and unreasonable to award damages against a defendant. However, once there is actual loss, even if there is also the chance of further loss, a plaintiff must commence proceedings within the appropriate limitation period, and can obtain damages reflecting actual loss suffered plus damages reflecting the chance of any further loss." 31 Handley JA observed in Scarcella v Lettice at [24] that: "The general principle is that time runs from when the cause of action is complete, whether or not this is discovered or discoverable. The exceptions for latent defects in buildings, latent defects in title, and prospective and contingent losses are only apparent exceptions to this general rule. They depend in each case on a finding that the particular form of economic loss had not been suffered when the plaintiff became committed to the risk, but only later when the risk actually accrued." 32 Whether and when damage is suffered is a matter of fact - Wilson v Rigg [23].

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Submissions 33 The defendants submitted the Full Federal Court held that all that the contract required of Caltex was to provide a report indicating that the work necessary to decontaminate the site had been undertaken, not that the work had achieved the desired result. Thus the bundle of rights that the plaintiff actually obtained on exchange of contracts was such that it was only entitled to a report indicating that certain works had been done but not a bundle of rights whereby Caltex was obliged to provide a report proving or certifying that the works had achieved the outcome of decontamination. Accordingly, the damage occurred upon the exchange of contracts as it was then that the plaintiff suffered a non-negligible, actual and quantifiable loss, being the difference between the purchase price and the (lesser) true market price of the land. Accordingly, the cause of action was statute barred as the action was commenced more than six years after the exchange of contracts. 34 The plaintiff submitted that it suffered no loss on exchange of contracts because, at the time of exchange, it was not bound to purchase contaminated land, it was simply bound to permit Caltex to continue the remediation process until such time as it stated that it had completed the remediation process and provided a report to the plaintiff intended to satisfy the plaintiff that the remediation process had been completed. This process of remediation continued from the date of exchange (4 December 1998) until the Lot U Report was provided to the plaintiff's solicitor (being the defendants) on or about 16 February 2000. On providing the Report, the plaintiff was still not bound to purchase the contaminated land, as the contract entitled the plaintiff to, within seven days of receipt of the Report, object to the Report if it was not satisfied (acting reasonably) that the Report indicated that the remediation works had been completed. If such objection was taken by the plaintiff, a contractual mechanism took effect, whereby Caltex could:

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General principles 44 In Anshun at 602 it was held "…there will be no estoppel unless it appears that the matter relied upon as a defence in the second action was so relevant to the subject matter of the first action that it would have been unreasonable not to rely on it. Generally speaking, it would be unreasonable not to plead a defence if, having regard to the nature of the plaintiff's claim, and its subject matter, it would be expected that the defendant would raise the defence and thereby enable the relevant issues to be determined in the one proceeding." 45 As was observed by the Court of Appeal in Champerslife Pty Limited v Manojlovski [2010] NSWCA 33 [4]: "The mere fact that the matter could have been raised does not mean it should have been raised (for the operation of the principle). Rather, it has to be so relevant as to make it unreasonable not to raise it." 46 There are a variety of circumstances why a party may justifiably refrain from litigating an issue in one proceeding yet wish to litigate the issue in other proceedings, eg expense, importance of the particular issues, motives extraneous to the actual litigation, etc. - Anshun at 603. 47 In Anshun (at 603) it was said: "It has generally been accepted that a party will be estopped from bringing an action which, if it succeeds, will result in a judgment which conflicts with an earlier judgment… The likelihood that the omission to plead a defence will contribute to the existence of conflicting judgments is obviously an important factor to be taken into account in deciding whether the omission to plead can found an estoppel against the assertion of the same matter as the foundation for a cause of action in a second proceeding. By 'conflicting' judgments, we include judgments which are contradictory, though they may not be pronounced on the same cause of action. It is enough that they appear to declare rights which are inconsistent in respect of the same transaction." 48 In Rippon the plaintiff was held to be estopped from raising an issue against a defendant where the same issue had been unsuccessfully raised by him in earlier proceedings against a different defendant. The court applied Reichel v Magrath (1889) 14 App Cas 665 at 668 where it had been held: "…it would be a scandal to the administration of justice if, the same question having been disposed of by one case, the litigant were to be permitted by changing the form of the proceedings to set up the same again…there must be an inherent jurisdiction in every court of justice to prevent such an abuse of its procedure…" 49 In Haines v Australian Broadcasting Corporation (1995) 43 NSWLR 404 at 414 Hunt CJ at CL distilled the following statement of principle from the authorities: "There are obviously limitations to striking out pleadings or causes of action as an abuse of process upon the basis stated in Reichel v Magrath. The issue determined in the earlier case which is sought to be litigated in the later case must be one which the party propounding it in the later lost in the former. The principle does not work in reverse to enable the party who won the issue in the earlier case to prevent it being litigated in the later proceedings by someone who was not a party in the former proceedings. It must be an issue which was necessarily determined in the earlier case, and one of importance to the final result. It must have been properly argued - by which I mean that…the tribunal which decided it was an appropriate one to do so, that the parties were appropriate contradictors and that the issue was regarded by them as one of importance…In normal circumstances the decision disposing of the issue must have been a final one - by which I mean it was not subject to appeal. There may also be circumstances in which, notwithstanding the absence of an appeal, it is clear that the earlier decision has overlooked some binding authority, or that it has caused the successful party a manifest injustice…all the circumstances of the determination in the earlier case may be considered." 50 In considering whether an Anshun estoppel has been established it is necessary to bear in mind that "shut[ting] out a claim…a party wishes to pursue, without determination of its intrinsic merit, on the ground that it ought to have been raised in earlier litigation…is a serious step, [and] a power not to be exercised except 'after a scrupulous examination of all the circumstances'." ( Habib v Radio 2UE Sydney Pty Limited [2009] NSWCA 231 at [85]). 51 The power to stay proceedings permanently on the ground that they are an abuse of process should be exercised with caution and only in the most exceptional or extreme case. The onus of satisfying the court that there is an abuse of process lies upon the party alleging it, and it is "a heavy one" - Habib at [79]. 52 In General Steel Industries Inc. v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 129 it was stated: "…the jurisdiction summarily to terminate an action is to be sparingly employed and is not to be used except in a clear case where the Court is satisfied that it has the requisite material and the necessary assistance from the parties to reach a definite and certain conclusion."

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Determination 53 It was common ground the Anshun principle was potentially applicable where there was a failure to litigate an issue in the first proceedings and the same issue was raised by the same party in later proceedings between the original parties. 54 The defendants sought to apply the Anshun principle to the situation here where the later proceedings were brought by the plaintiff against a different party. 55 The plaintiff submitted the Anshun principle had no application where the later proceedings were against a different defendant. The plaintiff's submission was supported by the distillation of principle in Haines (see [49] above) which required that the issue had been "necessarily determined in the earlier case". 56 However, in Habib McColl JA (with whom Giles and Campbell JJA agreed) said, at [83]: "An Anshun estoppel also arises where an omission to plead a claim or defence will contribute to the existence of conflicting judgments, including those which are contradictory, though they may not be pronounced on the same cause of action as long as they appear to declare rights which are inconsistent in respect of the same transaction. Thus an Anshun estoppel will apply even though the parties to the second proceedings are not the same as in the first. Although there may be 'no question…of oppression and unfairness' where the parties in the second action 'were not parties to the earlier action', the new proceedings may threaten the integrity of the administration of justice if they raise the prospect of conflicting judgments." (See also Handley JA in Rippon at [19] and [24]). 57 Accordingly, I conclude the Anshun principle may be applied where the later proceedings are against a different defendant, at least, where conflicting judgments may result. 58 A crucial issue sought to be litigated in the present proceedings in respect of post-exchange liability is whether the Report indicated (in the sense determined by the Full Federal Court) that "the (remediation) Works have been completed". 59 That issue was not litigated in the Federal Court proceedings in relation to the contractual count against Caltex. There, the focus was upon the proper construction of cl 44 and the determination of whether cl 44.2(a) provided a cause of action to the plaintiff. 60 The Full Federal Court held the plaintiff's contractual rights were limited relevantly to cl 44.5 and that the Report was determinative that the "Works have been completed" unless the challenge contemplated by cl 44.5 had been triggered. 61 As it was common ground the challenge under cl 44.5 had not been triggered, the issue of whether the Report indicated (in the sense determined by the Full Federal Court) that "the (remediation) Works have been completed" was irrelevant. In those circumstances it was not unreasonable for the plaintiff not to raise the issue for determination. 62 A determination in the present proceedings that the Report does not indicate (in the sense determined by the Full Federal Court) that the works have been completed would not conflict with the judgment for Caltex on the contract issues argued in the Full Federal Court. 63 In the Federal Court proceedings the plaintiff alleged the Report was misleading and deceptive in various respects. These allegations formed the basis for the other causes of action which the plaintiff asserted against Caltex and the causes of action which it asserted against EES. 64 The plaintiff ultimately failed in respect of each of those causes of action (see [15]-[19] hereof). Not all of its allegations were considered by the court. However, the determination of those causes of action and the findings made in relation thereto did not involve findings as to the issue of whether or not the Report indicated that the "Works have been completed". 65 The determination of those causes of action will not give rise to conflicting judgments in the event the plaintiff succeeds in its action against the defendants. 66 In the course of its judgment the Full Federal Court made some comments, by way of obiter dicta, as to whether the plaintiff's case could have been formulated in other ways, in particular that

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